Succession Psychologists

By Robert Milburn

What do bankers do to help a take-no-prisoners entrepreneur pass the reins on to his or her younger family members? If the clients are at Abbot Downing, a Wells Fargo unit for ultra-wealthy clients with $37 billion in assets, the bankers increasingly call Arne Boudewyn, head of the firm’s Family Dynamics and Education office.

Boudewyn, a clinical psychologist, works closely with super wealthy clients on their family governance issues; how to pass on wealth to the next generation in a healthy way; their interpersonal family relationships; and articulating the family’s long-term goals.

Most big banks have a Boudewyn on call – for good reason. Over the next 30 years or so, more than $30 trillion will pass from Baby Boomers to their heirs. If the bankers don’t bond with the young heirs and provide them with much-needed services at an early stage, then it is likely the next generation will simply walk from the bank as soon as the aging wealth-creator dies. With so much at stake, banks are getting better at proactively helping families resolve their interpersonal issues before a botched succession plan blows up everyone (including the banker).

Consider Boudewyn’s work at Abbot Downing. He recently led a 3-day family retreat for one prominent billionaire family that was feuding. The patriarch had carefully amassed wealth in the farmland and construction business, but could not reach agreement with the family, as he advanced in age, on how to transfer family leadership. So Boudewyn got 44 family members – four generations ranging in ages from five to eighty years old – to attend an Abbot Downing retreat.

“What made this family successful was their dominant, hard-charging style,” Boudewyn said. But that did not result in a climate where genuine family discussions could take place. “We often hear from families like this that senior members are waiting for heirs to step up and fill leadership roles. Meanwhile, the next generation says they either don’t know how to participate or there is no room for them to.”

To break the impasse, Boudewyn quickly separated the family into different ages. Adolescents were put through financial fluency education, teaching them how to analyze risk and manage investment portfolios, while children under eleven years old were taught about philanthropy by stuffing bears for donation to a local charity.

Meanwhile, in nearby rooms, Generation 1 and 2 were given a test that Boudewyn calls “the strength finder,” essentially a personality assessment that helps identify different aptitudes and talents. “The family realized that their dominant communication style was steamrolling each other’s ideas,” Boudewyn said. As a result, “the family wasn’t having a lot of fun.”

In short, the family’s biggest strength was also their biggest weakness. How to hit the reboot button on the family’s dynamics? Non-blood family members were typically excluded from any business discussions, but Boudewyn had the in-laws also take the survey. Across the board, be they male or female, the spouses were typically the rock of their relationship, had more likely focused on long-term planning, and had brought new life and joy to the family. A perfect counterweight, in other words, to the blood members’ hard-nosed jockeying for position. So while the family heavyweights were instrumental in amassing wealth, it was their spouses or in-laws who played a subtle, important role in the family’s well-being.

It was a revelation to the family and they collectively decided a more inclusive discussion would help in the leadership transition. “The family created an internship, to get the next generation involved, brought one of the in-laws into the family business and is considering another,” Boudewyn said.

Still a long ways to go, of course, but that’s precisely the point. A healthy succession from one generation to another is built out of many such small but profound insights, and the wisest bankers are finding they need trained staff on hand to help bring about such revelations.

About Penta

Written with Barron’s wit and often contrarian perspective, Penta provides the affluent with advice on how to navigate the world of wealth management, how to make savvy acquisitions ranging from vintage watches to second homes, and how to smartly manage family dynamics.

Richard C. Morais, Penta’s editor, was Forbes magazine’s longest serving foreign correspondent, has won multiple Business Journalist Of The Year Awards, and is the author of two novels: The Hundred-Foot Journey and Buddhaland, Brooklyn. Robert Milburn is Penta’s reporter, both online and for the quarterly magazine. He reviews everything from family office regulations to obscure jazz recordings.